National Consumer Disputes Redressal
Kumaribai vs Devendra Sonkar & Anr. on 15 November, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 1835 OF 2019 (Against the Order dated 08/05/2019 in Appeal No. 1108/2018 of the State Commission Chhattisgarh) 1. KUMARIBAI W/O. LATE SH. CHHOTELALA GADHEWAL, R/O. WARD NO. 6, NEAR RAILWAY CROSS, MOTIPUR, DISTRICT-RAJNANDGAON CHHATTISGARH ...........Petitioner(s) Versus 1. DEVENDRA SONKAR & ANR. (LIC AGENT, CODE NO. 01771-249)R/O. INDIRA NAGAR, WARD NO. 41, NEAR WATER TANK DISTRICT-RAJNANDGAON CHHATTISGARH 2. BRANCH MANAGER, LIFE INSURANCE CORPORATION OF INDIA, OFFICE AT STATION ROAD, DISTRICT-RAJNANDGAON CHHATTISGARH ...........Respondent(s) REVISION PETITION NO. 2622 OF 2019 (Against the Order dated 24/09/2019 in Appeal No. 420/2019 of the State Commission Chhattisgarh) 1. KUMARIBAI W/O. CHOTELAL GADHEWAL, R/O. WARD NO. 6, OPP. RAILWAY CROSSING MOTIPUR, RAJNANDGAON TAHSIL AND DISTRICT-RAJNANDGAON CHHATTISGARH ...........Petitioner(s) Versus 1. DEVENDRA SONAKAR & ANR. S/O. ZUNNULAL SONKAR, R/O. INDIRA NAGAR, WARD NO. 41, OPP. WATER TANK, TAHSIL & DISTRICT-RAJNANDGAON CHHATTISGARH 2. LIFE INSURANCE CORPORATION THROUGH THE BRANCH MANAGER, OFFICE LIC STATION ROAD, TAHSIL AND DISTRICT-RAJNANDGAON CHHATTISGARH ...........Respondent(s)
BEFORE: HON'BLE DR. INDER JIT SINGH,PRESIDING MEMBER
FOR THE PETITIONER : FOR THE PETITIONERS :
IN RP/1835/2019 : MR. SANJAY KUMAR, ADVOCATE
IN RP/2622/2019 : MR. MOHIT CHAUHAN, ADVOCATE FOR THE RESPONDENT : FOR THE RESPONDENTS
IN BOTH THE RPS : MOHD. ANIS UR REHMAN, ADVOCATE FOR R-1
MR. RAO RANJIT, ADVOCATE FOR R-2
Dated : 15 November 2023 ORDER
1. The Revision Petition (RP) 1835/2019 has been filed by the Petitioner against Respondents as detailed above, under section 21(b) of Consumer Protection Act 1986, against the order dated 08.05.2019 of the State Consumer Disputes Redressal Commission, Chhattisgarh (hereinafter referred to as the 'State Commission'), in First Appeal (FA) No. 1108/2018 in which order dated 28.11.2018 of District Consumer Disputes Redressal Forum, Rajnandgaon, Chhattisgarh (hereinafter referred to as District Forum) in Consumer Complaint CC/83/2018 was challenged, inter alia praying to set aside the order of the State Commission and restore the order of District Forum. FA/1108/2018 was filed by Respondent-1 herein (OP-1 before the District Forum). Similarly, RP/2622/2019 has been filed against order dated 24.09.2019 of the State Commission in FA/420/2019, in which order dated 26.11.2018 of District Forum in CC/220/2018 have been challenged. FA/420/2019 was also filed by Respondent-1 herein (OP-1 before the District Forum).
As the above stated RPs have been filed against the similar/related orders of the State Commission, parties involved are the same, and issues for consideration/determination are related, these are being taken up together under this order. For the sake of convenience, parties would also be referred to as they were arrayed before the District Forum.
RP NO. 1835 OF 2019 While the Revision Petitioner (hereinafter also referred to as Complainant) was Respondent-1, the Respondent-1 (hereinafter also referred to as OP-1) was Appellant and the Respondent-2 (hereinafter also referred to as OP-2) was Respondent-2 in the said FA/1108/2018 before the State Commission, the Revision Petitioner was complainant and Respondents were OPs before the District Commission in the CC/83/2018.
Notice was issued to the Respondent on 16.09.2019. Parties filed Written Arguments/Synopsis on 23.08.2023 (Complainant/Petitioner), 27.08.2023 (Respondent-1/OP-1) and 19.06.2023 (Respondent-2/OP-2) respectively.
Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that:
The petitioner's husband had obtained a new money-back policy, Policy No. 387-755-312, from OP-1. This policy had an assured sum of Rs. 1,25,000/- for a period of 20 years, with a quarterly premium of Rs. 2,980 including GST, starting from 15.10.2014. The complainant's husband consistently paid the premiums for the policy to OP-1. Following the demise of the complainant's husband, she approached OP-1 as the nominated beneficiary to claim the assured sum of the insurance policy. However, OP-1 failed to facilitate the disbursement of the insurance amount, offering only false assurances of assistance. Consequently, the complainant initiated a claim petition seeking to obtain the due amount.
6. Vide Order dated 28.11.2018 in the CC/83/2018, the District Forum has allowed the complaint and directed OP-1 to pay Rs. 1,25,000/- as compensation @6% p.a. and dismissed the complaint against OP-2.
7. Aggrieved by the said Order dated 28.11.2018 of District Forum, OP-1/Respondent-1 appealed in State Commission and the State Commission vide order dated 08.05.2019 in FA/1108/2019 has dismissed the complaint and allowed the appeal of OP-1.
8. Petitioner has challenged the said Order dated 08.05.2019 of the State Commission mainly on following grounds:
The order passed by the State Commission is deemed illegal, arbitrary, and contrary to the facts, materials, and evidence available on record. The State Commission allegedly failed to acknowledge that the Consumer Forum rightly awarded in favor of the complainant; the complainant suffered losses due to the OPs' service deficiency, which was intentional and deliberate.
The State Commission failed to recognize that the complainant successfully proved the disputes regarding the claim before the District Forum. The State Commission overlooked the fact that OP-1 accepted the premium amount for the policy in question. The complainant asserts that OP- 1 recorded the premium amount for the policy in his diary. The State Commission made an error in their decision, stating that the District Forum's order was based on conjecture and not legally sustainable.
The State Commission did not adequately grasp the actual dispute between the parties in the case. The order issued by the District Forum was fair, appropriate, and legally sound, holding the OP accountable. However, the State Commission overturned the District Forum's order without conducting a proper examination and consideration of the case.
RP NO. 2622 OF 2019 While the Revision Petitioner (hereinafter also referred to as Complainant) was Respondent-1, the Respondent-1 (hereinafter also referred to as OP-1) was Appellant and the Respondent-2 (hereinafter also referred to as OP-2) was Respondent-2 in the said FA/420/2019 before the State Commission, the Revision Petitioner was complainant and Respondents were OPs before the District Commission in the CC/220/2018.
Notice was issued to the Respondent. Parties filed Written Arguments/Synopsis on 15.08.2023 (Complainant/Petitioner), 27.08.2023 (Respondent-1/OP-1) and not filed by (Respondent-2/OP-2) respectively.
Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that:
The complainant's husband, Chhote Lal Gadhewal, obtained an insurance policy (Policy No. 387-967-428) through OP-1, who acted as an insurance agent. The husband paid quarterly installments with the understanding that these payments would be deposited in the insurance office. This policy was a life-saving insurance plan with an annual insurance amount of Rs. 9,784 and a total sum assured of Rs. 2,00,000. Despite continuous payments, OP-1 did not provide acknowledgment of the payments or the policy bond. The complainant claims that her husband paid a total of Rs. 28,250 from May 2016 to 24.12.2017. OP-1 allegedly acknowledged the receipt of this amount. The husband of the complainant passed away on 27.12.2017 and as the nominee, the complainant submitted the required documents to the OPs to claim the insurance amount. The OPs allegedly assured the complainant that the insurance amount would be paid. However, on 18.09.2018, the complainant was informed that the claim was canceled due to her husband's ill health. The complainant asserts that OP-1 had previously provided information about her husband's improved health to OP-2, the insurance company. Despite this information, the insurance claim was canceled.
12. Vide Order dated 26.11.2018 in the CC/220/2018, the District Forum has allowed the complaint and directed OP-1 to pay Rs. 2,00,000/- as compensation @6% p.a. and dismissed the complaint against OP-2.
13. Aggrieved by the said Order dated 26.11.2018 of District Forum, OP-1/Respondent-1 appealed in State Commission and the State Commission vide order dated 24.09.2019 in FA/420/2019 has dismissed the complaint and allowed the appeal of OP-1.
14. Petitioner has challenged the said Order dated 24.09.2019 of the State Commission mainly on following grounds:
The OP-1(LIC Agent) has acknowledged the receipt of premiums from the complainant's deceased husband during his lifetime. This acknowledgment places responsibility on the agent for the policy lapsing and for not fulfilling the assurances provided to the deceased individual. Furthermore, the OP-2 (LIC) issued the insurance policy in the name of the deceased husband, establishing a legally binding contract between him and the OPs. OP-2, in their written statement, has admitted that the deceased husband had successfully revived the lapsed policy. This admission confirms the revival of the policy and establishes the complainant's entitlement to the insurance claim as the nominee. This acknowledgment of the revived policy and the complainant's status as the nominee reinforces the complainant's position in the case.
At the time of reviving the lapsed policy, the deceased husband's health was in good condition. This substantiates that there was no suppression of material facts during the policy's revival process. OP-1 provided assurance regarding premium deposits with OP-2's office and duly collected premiums accordingly. This demonstrates a clear deficiency in service and negligence on the part of the OPs. Additionally, it is evident from the Medical Attendance Certificate that no material facts were suppressed during the policy's revival. The certificate does not reveal any indication of suppression of information. The concluded contract between the deceased husband and the opposite parties (OPs), both at the issuance of the insurance policy and its subsequent revival, entitles the complainant to make a claim from the OPs. This contractual agreement supports the complainant's right to seek a claim from the OPs. The complainant successfully demonstrated that premiums were indeed paid to OP-1 by the deceased husband while he was alive. This highlights the negligence and deficiency in service on the part of both OP-1 and OP-2 for not releasing the claim amount to the complainant as the nominee.
Furthermore, the State Commission did not adequately take into account documentary evidence that contradicted the OPs' assertion of material fact suppression. Additionally, the State Commission seemed to overlook the absence of supporting documents or laboratory reports mentioned in their repudiation letter. The State Commission failed to appropriately consider the merits of the case and did not address the grounds on which the District Forum had ruled in favor of the complainant.
15. Heard counsels of both sides. Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.
RP NO. 1835 OF 2019 The counsel for petitioner/complainant argued that the State Commission did not consider the documentary evidence submitted by the complainant and failed to review the entire file on record. The OP-1 LIC Agent admitted to receiving the premium from the deceased husband of the complainant during his lifetime. This admission establishes the liability of the LIC Agent for not fulfilling the assurances given to the deceased husband. The OP-1 admitted to receiving premiums from the deceased husband but is now attempting to avoid liability by claiming that the payments were made for another policy. This contradicts the earlier admission and raises questions about the OP-1/agent's credibility.
The OP-2 admitted to issuing the insurance policy in the name of the deceased husband, confirming the existence of a concluded contract between the husband and the OPs. The OP-1 is an authorized agent of the OP-2, which makes the OPs collectively responsible for the deficiency in service. The OP-1's admission of receiving premiums from the deceased husband establishes his liability for not acting in accordance with the assurances given to the deceased husband. The issuance of the insurance policy in the name of the deceased husband confirms the existence of a concluded contract between the husband and the OPs. The OP-1's admission to receiving premiums during the husband's lifetime and the subsequent failure to issue the claim amount constitutes prima facie evidence of gross deficiency in service and negligence on the part of the OPs.
The State Commission erred in not holding the OP-1 responsible and failed to consider crucial documentary evidence, which suggests that the OPs willfully avoided the claim of the complainant. The counsel for complainant challenges the legality, propriety, and validity of the State Commission's order and argues that it goes against the principles of natural justice. The complaint was initially allowed by the District Forum, and the State Commission's order, which set aside the legitimate claim, is considered to be illegal.
The counsel for OP-1/Respondent-1 argued that he is merely an agent for OP-2. The husband of the complainant had three policies, but the premiums were not deposited on time, resulting in the policies lapsing. OP-2, LIC, is responsible for any compensation. OP-2, also filed a reply, denying the complaint's contents and stated that since the complainant did not deposit the premium amount, she was not entitled to any relief. In the State Commission, OP-1 submitted premium receipts and stated that any amount given by the complainant's husband was deposited with LIC. OP-1 did not commit any deficiency in service or unfair trade practice and, therefore, the order against them by the District Forum was incorrect and should be dismissed.
The State Commission, in pages 4 and 5 of the order, provided detailed reasons for their decision. They also explained their rationale on pages 6 and 7 when allowing the appeal of OP-1 and dismissing the complaint of the complainant. The State Commission observed in the final paragraph of the order that the complainant did not provide any evidence to show that her husband had given money to OP-1. Furthermore, the Commission noted that no receipts were submitted to prove that any amount had been given to OP-1. Taking into account all the facts and grounds, the State Commission issued a legally sound order that does not warrant interference. The complainant failed to substantiate her case, and the allegations made by the complainant lack supporting evidence. Therefore, the order of the State Commission is well-reasoned, and the revision petition filed by the complainant should be dismissed in the interest of justice.
The counsel for OP-2/Respondent-2 argued that the District Forum, in its order dated 28.11.2018, allowed the complaint only against OP-1, Devendra Sonkar, who was the agent of OP-2, Life Insurance Corporation of India. However, the District Forum dismissed the complaint of the Complainant as against OP-2. The Complainant did not file an appeal against the dismissal of the complaint against OP-2, before the Hon'ble State Commission. As a result, the order of dismissal of the complaint against OP-2, became final and binding due to the lack of an appeal by the Complainant. The counsel further argued that the cause of action, if any, should lie against OP-1, and not against OP-2, in this Revision Petition. Therefore, this Hon'ble Commission is requested to dismiss the Revision Petition of the Complainant as against OP-2, on this ground alone.
The counsel for OP-2 further argued that Complainant's husband had taken a New Money Back Insurance Policy with quarterly instalments for 20 years and the instalments for October 2016 to October 2017 were not paid by the Complainant to the Corporation, leading to the policy lapsing. The Complainant alleged that the instalments were paid to OP-1, Devendra Sonkar, but were not deposited by him with OP-2, Life Insurance Corporation of India. OP-1, Devendra Sonkar, was appointed as an agent of OP-2, Life Insurance Corporation of India, and was not authorized to receive money on behalf of the Corporation. No receipt for the disputed amount was issued by OP-2, to the Complainant. The District Forum upheld OP-2's contention that the instalments were only paid to OP-1, but were not deposited with the Corporation. However, the State Commission disbelieved even this version of the Complainant and quashed the order of the District Forum.
RP NO. 2622 OF 2019 The counsel for the complainant/petitioner argued that the State Commission failed to give due consideration to the documentary evidence presented by the complainant. Instead, they relied on their own previous order in FA No. 1108/2018, which has been challenged before the National Commission (NCDRC) through Revision Petition No. 1835/2019. This ongoing adjudication indicates a material irregularity in the decision-making process. Furthermore, the State Commission overlooked critical facts that should have had a bearing on their decision. These include the acknowledgment by OP-1 of receiving premiums from the deceased husband, the issuance of the insurance policy by OP-2 in the deceased husband's name, and OP-2's admission of the policy revival.
The counsel for complainant also points out that the deceased husband was in good health when he revived the policy, and there was an assurance by OP-1 to deposit premiums with OP-2, which was consistently met. Moreover, the authorization of OP-1 by OP-2 clearly establishes their role in the service deficiency. The absence of any material fact suppression during the deceased husband's hospital admission, as evidenced by the Medical Attendance Certificate, further supports the complainant's case. Given these compelling facts, it is evident that there was a clear deficiency in service on the part of OP-1 LIC Agent and OP-2 LIC. Therefore, the State Commission's decision to set aside the complainant's legitimate claim, originally allowed by the District Forum, appears to be against the principles of natural justice and fairness.
The counsel for OP-1 presented the argument that OP-1 was an agent of LIC and had indeed paid the premium to LIC. They contended that if the husband of the complainant had failed to deposit the premium, it was not the responsibility of OP-1 for the policy lapse. The counsel asserted that the premium amount had been deposited with LIC on humanitarian grounds, and OP-1 was not accountable for the non-payment of the premium. It was OP-2, LIC, that had repudiated the claim. Furthermore, OP-2, LIC, contended that the complaint should be dismissed because the complainant had suppressed facts while obtaining the policy and provided incorrect information, leading to the non-payment of the claim. In response to the District Forum's order, OP-1 appealed, and the State Commission ultimately dismissed the complaint.
The counsel for OP-1 further argued that the complainant had not consistently paid the premium, and while the policy had lapsed, it was revived on 04.12.2017. At the time of the husband's death, the insurance policy was in force. The State Commission noted that the complainant had not effectively proven their case and had provided false information regarding the husband's health. Additionally, State Commission acknowledged that on the date of death, the insurance policy was active, and OP-2 had repudiated the claim based on information suppression by the complainant. The counsel contended that the complaint against OP-1 was unwarranted, and the State Commission had issued a well-reasoned order that did not necessitate interference.
16. In the present cases, it is not denied by OP-2-LIC that OP-1 was their duly appointed agent, but OP-2 has contended that as per Life Insurance Company (Agents) Regulations 1972, only authorised agents are permitted to collect premium on behalf of Life Insurance Company, in the present case, OP-1 was not authorised to collect premium from the insured on behalf of OP-2. We find it hard to accept that people who intend to buy Insurance Policy and/or who have already bought such a policy can understand such a fine distinction between a 'duly appointed but unauthorised to collect premium Agent' and 'duly appointed and authorised to collect premium Agents'. Expecting uneducated or rural people to understand such fine distinction is totally unacceptable. Moreover, in the present cases, even if it is accepted that OP-1, though a duly appointed agent of OP-2 but was unauthorised to collect premium as contended by OP-2, question arises why OP-2 kept on accepting premium from OP-1 in both the cases, knowing very well that he was not authorised to do so. Why on getting to know about such unauthorised action of OP-1 having collected such premium OP-2 did not proceed against OP-1 by taking appropriate action under the relevant Regulations, including termination of services of OP-1. Action of OP-2 in accepting premium from OP-1 amounts to ratifying the wrongful action of OP-1 and OP-2 is estoppled from now pleading that OP-1 was not authorised to accept premium on behalf of OP-2. Hence, OP-1 being a duly appointed agent of OP-2, the latter (OP-2) is vicariously liable for the wrongful actions of OP-1. Further, we are of the considered view that OP-2, which is a well-established Government Company, by accepting premium from OP-1, who as per their own case, was not authorised to do so, and by not taking timely action against such agents have encouraged wrong-doings by such unauthorised agencies, thereby putting the innocent policy holders at risk and hence are guilty of deficiency in service/unfair trade practice, and hence equally liable in the present cases along with OP-1.
16.1. We have heard learned Counsels for the parties and have gone through the evidence on record. The diary submitted as evidence shows that the payments were made for insurance premiums. The complainant in a good faith had been making payments for insurance policy premiums through OP-1 to the insurance company. This admission was made by OP-1 in his written statement to the District Forum. With regard to the absence of a formal receipt, OP-1 conceded to receiving premiums from the complainant and maintaining oral communication with the complainants. Such action of OP-1 was in contravention of the stipulations outlined in Regulation 8(4) of the Life Insurance Corporation of India (Agents) Regulations, 1972, which explicitly proscribe unauthorized agents from collecting premiums on behalf of the Life Insurance Corporation unless specifically authorized to do so, and in the present case OP-2 has stated that OP-1 was not authorized to collect premium on their behalf. The complainants, who are involved in the trade of vegetable vending, should not be automatically assumed to possess knowledge of the company's legal and official rules and regulations. It is apparent that the complainants are not aware of whether the agents collecting premiums on behalf of LIC though duly appointed by L.I.C. are authorized or unauthorized to collect premium. This lack of awareness underscores the importance of clear communication and transparency in such matters to ensure that policyholders are well-informed about the status of their agents and the proper procedures for premium payment. Therefore, we extend the benefit of the doubt to them. Meanwhile, it remains a well-established practice for such unauthorized but duly appointed agents to collect payments on behalf of LIC, and it is not unlikely that instances of negligence or fraud may reoccur, involving agents in delaying the deposit of premium amounts with LIC or failing to deposit them altogether. Only a limited number of policyholders might be aware of the regulation prohibiting unauthorized agents from collecting premium amounts and understanding such fine distinction between 'duly appointed but unauthorized to collect premium agent' and 'duly appointed and authorized to collect premium agents'. In practice, agents, during the process of acquiring new business, frequently make assurances to prospective policyholders regarding consistent services, encompassing reminders, premium collection, and addressing payment-related issues with LIC, particularly concerning money-back policies.
16.2. The Insurance Company has put forth the contention that, pursuant to their established rules and regulations, agents who are not duly authorized are prohibited from collecting premiums on behalf of the company. In the present case, the unauthorized agent's actions were thus in contravention of these statutory provisions by collecting premium amounts from the complainants and subsequently failing to deposit them with the Insurance Company. In the present cases, a similar practice of unauthorized premium collection by agents led to the lapse of the complainant's husband's policy(ies). In this context, both OP-1 and OP-2 share liability. LIC (OP-2) was aware of this practice, as they had been receiving money through this unauthorized channel. If LIC had taken any actions or steps to address this issue, it could have put an end to this practice and potentially prevented the policy lapse.
16.3. In RP/2622/2019, having thoroughly examined all the documents, records, and written submissions in this case, we observe that at the time of obtaining the policy (in July 2016), the complainant did not withhold any facts or health-related issues. The matter of acknowledgment and disclosure of any issues arose only when the policy was reinstated after lapsing. The diary presented as a document show that the premiums were being paid. This is also corroborated by the complainant's statement, which mentions the presence of OP-1's signature. The complainant has affirmed in both forums that premiums were paid to OP-2 through OP-1 in good faith, a point that OP-1 has also acknowledged by stating that he received the premiums from the complainant and maintained oral communication with them.
16.4. It is important to note that the practice of unauthorized agents collecting payments on behalf of LIC continues, and the possibility of instances of negligence or fraud, involving unauthorized agents in delaying the deposit of premium amounts with LIC or neglecting to deposit them entirely, remains a valid concern. In this particular case, a similar practice led to the lapse of the policy of the complainant's husband. Subsequently, upon the revival of the policy, the issue of the suppression of health-related information occurred, and this situation arose solely because the premiums were not paid by OP-1.The revival form, as claimed by the complainants, was filled out by OP-1, with only the complainant's husband's signature affixed. The policy was reinstated on 04.12.2017, and the complainant's husband passed away on 27.12.2017. If the policy had not lapsed, the claim would have been accepted by OP-2, which is a standard procedure and protocol in insurance matters.
16.5. It is an undisputed fact that OP-2 (LIC) received payments from the complainant through OP-1, despite the existence of a condition expressly prohibiting OP-1 from collecting premiums on behalf of LIC. This prohibition stems from a regulation [Regulation 8(4)] introduced by LIC in 1972, which later became a rule in 1981, explicitly disallowing unauthorized agents from collecting premiums on behalf of LIC. Given LIC's practice of hiring and appointing agents, this regulation is clearly outlined in the agents' appointment letters, OP-1's violation of these regulations raises a valid and reasonable argument that even OP-2 LIC did not adhere to the guidelines established by IRDAI and failed to take action against OP-1 even when it came to its knowledge that OP-1 was unauthorisedly collecting premium from policyholder, including complainant's husband in the present cases.
16.6. As per the guidelines outlined in IRDA/Life/Misc/Cir/106/05/2015, insurers are advised to ensure that insurance agents and intermediaries who are authorized to collect premiums adhere to the provisions of Section 64 VB (4) of the Act. Since OP-2 has admitted that OP-1 was appointed but not authorized to collect money from the complainant, and OP-1 did pay premiums for a significant duration, while OP-2 accepted these premiums from OP-1, it points to a deficiency in service on the part of OP-2. This acknowledgment reveals the questionable practice of unauthorized agents collecting premiums from complainants, and yet, OP-2 has not taken sufficient measures to rectify this situation. LIC routinely issues due notices and warnings to policyholders when their policies are at risk of lapsing. OP-2 cannot absolve itself of liability by merely stating that the agent was appointed but not authorized, especially after collecting payments for a significant period of time. It is the fundamental responsibility of OP-2 to distinguish and ascertain whether an agent is authorized or not. It is worth noting that even a printed statement or warning to inform policyholders of the irregular practice regarding premium collection by unauthorized agents could have been implemented. Such a step would have been beneficial in ensuring policyholders' awareness and compliance with the correct payment procedures, which would ultimately contribute to a fair and transparent insurance process.
16.7. Indeed, it was the duty of OP-2 to monitor its subordinates and agents in the interest of the public. OP-2's failure to adhere to the laid down guidelines, despite accepting money from OP-1, constitutes a deficiency in service and an unfair trade practice. In this case, premiums were consistently paid by OP-1 for an extended period, and LIC took no action to inform the complainants or other policyholders that agents are not authorized to collect premiums from them.
16.8. Hence, we hold the Insurance Company also liable and hold that both OP-1 and OP-2 share equal responsibility for the deficiency in service and the unfair trade practice of illicitly collecting premium amounts from the complainants without proper authorization. It is incumbent upon OP-2 to oversee and ensure that their agents and subordinates strictly adhere to the established rules and regulations and take appropriate action, including termination of services of such agents who are working in contravention of laid down guidelines. In light of this, we set aside the order of the State Commission and allow these Revision Petitions, upholding the order of District Forum with a modification that both OP-1 and OP-2 are liable jointly and severally.Top of Form
17. The pending IAs in both the cases, if any, also stand disposed off.
................................................ DR. INDER JIT SINGH PRESIDING MEMBER